Difference Between NCLT and NCLAT
The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are two vital institutions established under the Companies Act, 2013, to deal with corporate laws and insolvency matters. While their functions are interconnected, they have distinct jurisdictions, roles, and responsibilities.
Overview
1. National Company Law Tribunal (NCLT)
The NCLT is a quasi-judicial body established to adjudicate matters relating to companies under the Companies Act, 2013 and the Insolvency and Bankruptcy Code (IBC), 2016.
2. National Company Law Appellate Tribunal (NCLAT)
The NCLAT is an appellate body that hears appeals against decisions or orders passed by the NCLT and certain other authorities.
Key Differences
| Aspect | NCLT | NCLAT |
|---|---|---|
| Legal Foundation | Established under Section 408 of the Companies Act, 2013. | Established under Section 410 of the Companies Act, 2013. |
| Primary Function | Acts as the adjudicating authority for company law disputes and insolvency matters. | Acts as the appellate authority for decisions made by NCLT and other specified bodies. |
| Scope of Jurisdiction | Handles company-related matters, insolvency resolution, liquidation, oppression and mismanagement cases, and company mergers and demergers. | Hears appeals against decisions from NCLT, Insolvency and Bankruptcy Board of India (IBBI), and Competition Commission of India (CCI). |
| Position in Legal Hierarchy | First-instance forum for adjudication of disputes. | Second-instance appellate forum to challenge NCLT decisions. |
| Type of Cases Heard | Corporate insolvency and bankruptcy, oppression/mismanagement cases, company dissolution, mergers and amalgamations, etc. | Appeals against orders of the NCLT or other statutory authorities. |
| Decision-Making | Issues original orders and judgments based on the merits of the case. | Reviews the validity, correctness, and legality of NCLT orders. |
| Appeal Process | No further appeal lies against NCLT’s orders, except to NCLAT or in specific cases to other authorities. | Appeals from NCLAT’s decisions go to the Supreme Court of India under certain conditions. |
| Powers | Quasi-judicial body with powers equivalent to a civil court for specified cases. | Appellate authority with powers to modify, overturn, or uphold NCLT orders. |
| Members | Composed of a judicial member (judge) and technical members with expertise in corporate matters. | Includes a chairperson, judicial members, and technical members for appeals. |
| Timeframes | Focused on time-bound resolution, especially in insolvency cases (e.g., 330 days for CIRP). | Adheres to statutory timeframes for deciding appeals but may extend them under exceptional circumstances. |
| Nature of Authority | Primarily deals with original jurisdiction cases. | Deals exclusively with appellate jurisdiction cases. |
Jurisdiction of NCLT
The NCLT exercises jurisdiction in matters such as:
- Insolvency and Bankruptcy:
- Corporate Insolvency Resolution Process (CIRP).
- Liquidation proceedings.
- Company Law Disputes:
- Oppression and mismanagement claims.
- Approval of mergers and amalgamations.
- Depositor Complaints:
- Cases related to fraudulent practices or mismanagement of funds.
- Compounding of Offenses:
- Resolving non-compliance issues under the Companies Act.
Jurisdiction of NCLAT
The NCLAT exercises jurisdiction as follows:
- Appellate Jurisdiction Over NCLT Decisions:
- Any party aggrieved by an NCLT order can approach the NCLAT for redressal.
- Appeals from Competition Commission of India (CCI):
- Cases involving anti-competitive practices and abuse of dominant positions.
- Appeals from IBBI Decisions:
- Challenges against regulations and actions taken by the Insolvency and Bankruptcy Board of India.
- Appeals from Specific SEBI Cases:
- Certain securities-related cases as delegated.
Relation Between NCLT and NCLAT
- The NCLT serves as the court of first instance for company-related disputes and insolvency cases.
- The NCLAT provides a second level of scrutiny by reviewing decisions made by the NCLT. It ensures that the tribunal’s orders conform to legal standards.
For example:
- If a corporate insolvency resolution plan is approved by the NCLT but opposed by stakeholders, the appeal against such approval can be filed with the NCLAT.
- Similarly, an operational creditor denied relief by the NCLT in a cheque bounce recovery case may appeal to the NCLAT.
Appeal Process Flow
- From NCLT to NCLAT:
- Parties dissatisfied with NCLT’s decisions must file an appeal within 45 days of the order.
- NCLAT hears the appeal and issues its judgment.
- From NCLAT to Supreme Court:
- If any party remains aggrieved by the NCLAT’s decision, they can approach the Supreme Court under Section 423 of the Companies Act, but only on questions of law.
Examples of Cases Handled
NCLT:
- Approving or rejecting insolvency resolution plans.
- Granting relief to minority shareholders in oppression cases.
- Adjudicating merger approval requests.
NCLAT:
- Overturning or modifying an NCLT-approved insolvency plan.
- Handling appeals from CCI, such as cartels or price-fixing allegations.
- Settling disputes between creditors in insolvency matters.
Similarities Between NCLT and NCLAT
- Quasi-Judicial Nature: Both tribunals exercise quasi-judicial powers with authority similar to a civil court.
- Corporate Jurisdiction: Both deal with cases under corporate laws, especially related to companies and insolvency.
- Technical Members: Both include expert members for better understanding of technical financial and corporate issues.
Conclusion
The NCLT and NCLAT are integral to the effective implementation of corporate laws and insolvency proceedings in India. While the NCLT focuses on resolving disputes in their initial stage and issuing orders, the NCLAT acts as a safeguard against any errors or unfair decisions made by the NCLT. Together, they ensure a balanced, efficient, and just corporate governance and insolvency framework.
Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.
Advocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)
Contact: 88271 22304